By now, anyone in the insurance industry has at least heard about the imminent ruling from the Department of Labor that will expand the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA). You can search out numerous websites that cover the “what” of the rule, but there are limited resources for figuring out the “how.” And while the obvious implications are to the distribution arms of the business, companies can’t overlook the potentially deep impacts to operations and technology. As companies begin to peel back the layers of this onion, new risks and strategies will undoubtedly emerge. Here are a few of the key operational considerations we see right now:
- TIME: Preparation begins now. Even though the rule hasn’t taken effect yet, the DoL is expected to allow eight months, with many in the industry estimating years to comply fully with the various requirements. This means there’s not a moment to spare, and if you don’t have a Tiger, SWAT, or Delta-Force team in place right now, you’re already behind. At the very least, you should be looking at your 2016 operational and IT priorities and budgets to figure out how to accommodate the process and system modifications you’ll have to make.
- PROCESS & TECHNOLOGY: Certain processes, like 1035-exchanges, fund exchanges, rollovers, really anything where clients move money around or where clients speak with a customer representative, present a risk to carriers in some cases but not for others. In the past 20 years, many companies have sought to have consistent processes, cross-trained teams, and consolidated metrics. The DoL rule puts all that consistency squarely into question, requiring what some are calling “bifurcation” of process and systems. Start documenting your use cases, prioritizing them for risk, and putting mitigation action plans in place.
- CUSTOMER EXPERIENCE: It’s the latest iteration of customer service and voice of the customer. Attend any insurance conference or read any trade publication, and there is at least one session or article speaking to the need for insurers to pay attention to the overall customer experience. Well, your customers’ journeys just got a lot more complicated. If your customer journey maps are up to date, congratulations. If you’re asking yourself what a customer journey map is, check out a few resources. From the time an advisor initiates a conversation to the time, you make the last payment to a beneficiary, the communications and services you provide must comply with the DoL rule. That will impact your customers’ experience.
Barring a last-minute change, this rule will take effect, and insurers will have to make changes. Depending on distribution channels and product portfolio, some will be sweeping and others minimal. The time to start assessing your processes, technology and customer experience is now. The clock is ticking, and eight months goes by in a very short time.
Watch this space for additional thoughts on the DoL Fiduciary rule as we hear more from our clients. Join the NEOS community and receive periodic updates.